Essays

The key to understanding the manipulation of the gold market, this enormous scandal and fraud, is that it can be compared to a murder trial. In the United States a murderer can be put to death if he is found guilty beyond a reasonable doubt.

Last week in a Midas commentary we saw a brief paragraph with a quote from the CPM group. I have not seen any reaction to this news. I believe the message from the CPM Group is important to Gold investors so I decided to do a little research into the opaque world of Central Bank Gold and share it with you.

"Cautious, careful people, always casting about to preserve their reputation and social standing, never can bring about a reform. Those who are really in earnest must be willing to be anything or nothing in the world's estimation, and publicly and privately, in season and out, avow their sympathy with despised and persecuted ideas and their advocates, and bear the consequences."Susan B Anthony

Gold and Gold Equities: The near term is uncertain. The near-term path of the dollar is unclear. The world is probably decelerating towards disinflation. This could be a negative.

The ability of the gold futures market to absorb large spec liquidation on a small price break is long term bullish. Perhaps, the official sector is conducting an orderly retreat.

As opposed to our very positive supply/demand framework, the “official” gold supply/demand framework is not especially constructive. It now diverges so much from historical trends and abundant anecdotal information, that it has become discredited.

The gold bugs are a strange lot, really. They see conspiracies everywhere and at all times. If the government is not conspiring against the public, then business is conspiring against the government, or business AND the government are conspiring against the public, and, if not that, then all three are conspiring against ghostly, foreign forces that are set to wage some sort of economic war against the country.

The Gold Anti-Trust Action Committee (GATA) believes that central banks, acting through certain investment banks, have surreptitiously manipulated the price of gold. Such activity appears to have started in the mid-1990s and continues to this day. Prominent entities involved include J.P. Morgan Chase, Goldman Sachs, Deutsche Bank, the Federal Reserve, the Bank of England, and the Bank for International Settlements. GATA specifically alleges that the U.S. Treasury's Exchange Stabilization Fund has been used, contrary to official denials, for gold market interventions. Furthermore, GATA believes that the official sector intervened in the late 1990s to prevent an impending gold derivative crisis, the result of excessive short positions accumulated over many years.